- Liquidity: The Forex market is the most liquid market in the world. Due to its liquidity, the Forex market is a more favorable market for speculators in which to invest. Additionally, due to the liquidity factor, it has no major slippage problem compared to trading small stocks on the stock markets or smaller, illiquid futures such as coffee. This liquidity factor also means that orders are executed relatively quickly, which allows orders to be executed at the price of the order. In addition, in recent years, the Forex market has offered extremely narrow spreads. Most traders focus on trading in highly liquid majors where most of the trading volume occurs.
- 24 hour trading capacity: Another advantage that the Forex market has in other markets, including the stock markets, is the fact that the Forex market allows 24 hour trading activities. This means that traders are able to react immediately to news of political and economic changes around the world. In addition, the fact that the market operates 24 hours a day offers opportunities to make profits and reduce losses at any time of the day and, above all, it eliminates the problem of the spread each time a new day of stock exchange takes place in non-open markets 24 hours a day. Since the main shopping centers – London, New York, Sydney, Tokyo and Frankfurt – are located in five different regions and have different time zones, a trader has the ability to trade more than five overlapping trading sessions. The window of opportunity for trading is between 5:00 p.m. (Eastern Standard Time) Sunday at 4:30 p.m. (EST) Friday.
- Margin trading / leverage: When we talk about margin trading, we are talking about a trader’s ability to trade with more money than he has in his account. In the Forex market, with just a small margin, a trader is able to trade a much larger position than he would by trading on the stock market. This improved leverage factor allows the trader to increase profits when the opportunity arises. Example: Forex brokers offer leverage of 200 to 1, which means that a security deposit of $ 100 would allow a trader to buy or sell for $ 20,000 of currency. Similarly, with $ 1,000, we could trade with $ 200,000 and so on. The difference between the stock market and the Forex is that the margin deposit requirement is much higher for the stock market than for the Forex market. As such, the dollar value of margin trading increases further in the Forex market.
- No one can monopolize the market: the Forex market is such a huge global market with so many players that no trader or bank has the capacity to take the market and manipulate it to its own advantage. Even central banks find it difficult to exert a deep influence for an extended period. This is not the case in the stock market – where we often hear of speculators depressing the actions of a company through short selling.
- Minimums for Small Accounts: The Forex market is much easier to participate than other markets due to the minimum requirements to open a Forex trading account. To open a Forex trading account, you need to make only a small minimum deposit. This makes Forex trading accessible to anyone who wishes to trade in currencies. However, note that not all Forex brokers offer mini AC accounts, although the majority does.
Commissions / No Commissions: Most Forex brokers do not charge commissions, but instead make money on the trading spread. The bargaining gap is the difference between supply and demand prices. Currently, under normal market conditions, the trading spread between the major currency pairs should not exceed 3 pips. New electronic communication network (ECN) systems are now offered by Forex brokers. Typically, they offer a much improved allocation, but at the same time, brokers charge a commission per lot for using ECN as an execution system. Ask your broker about the costs associated with execution via an ECN-based execution platform, as they should offer an improved overall cost (Spread plus commissions).
- Constant Trading Action / Opportunities: One of the biggest attractions of the Forex market is that it allows for constant trading activity. Chances are that at any time there is a rate movement in at least one of the major currency pairs simply based on the volume of transactions and the number of world news events providing a vehicle to volatility, while offering endless opportunities to the trader. .
- Short selling without any restrictions: on the stock market, several regulatory restrictions are imposed on short selling, which makes short selling difficult for small traders, or even illegal on some of the stock markets. In Forex trading, there is nothing like this, as it is as easy to take a short position as it is to take a long position.